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February 17, 2010

New York Life, Ibbotson Develop Wealth Management Tools

Lifetime Wealth Strategies includes value of human capital

New York Life Insurance Company recently teamed up with Ibbotson Associates to help develop a new set of tools it is calling Lifetime Wealth Strategies, aimed at helping advisors account for their clients' total economic wealth and optimize their portfolios by making forward-looking insurance and investment decisions together.

"When clients are asked about their wealth, or what they are worth, they immediately think of cash, stocks, bonds, and real estate," Michael Gordon, first VP of New York Life, said in a statement. "But they often need to be prompted to consider another aspect of their worth: their human capital."

That, Gordon said, means the worth of a paycheck to a family over a lifetime, and to determine this, clients would need to fill out a questionnaire put together by Ibbotson, based on the firm's research on asset allocation strategies. This would then allow the advisor to provide the client with different proposals: Investments only, insurance only, or an integrated investment and insurance solution. The proposal could include investments only, insurance only, or an integrated investment and insurance solution which takes into account each person's human capital, financial capital, and risk tolerance.

The financial crisis has changed the way people think about their wealth and risk-taking, Gordon said, and now more than ever, "clients are seeking a financial strategy that balances protection needs with goal achievement." While "human capital cannot be traded like a stock," Gordon noted, "it is a vital component of wealth that must be diversified and protected."